By Kate Gibson, MarketWatch –
NEW YORK — U.S. stocks on Wednesday retreated after a three-session winning run, with equities taking a break from an advance that sent the S&P 500 Index up 8 percent this year.
“We think stocks are positioned for a bit of a pause here; it’s really nothing fundamental,” said Jim Russell, chief equity strategist at U.S. Bank Wealth Management in Cincinnati.
Markets have incorporated quite a bit of positive news — including improving employment trends in the United States, good corporate earnings for the fourth quarter, an apparent resolution to provide Greece some stability, low interest rates and recent Federal Reserve minutes relaying that a third round of quantitative easing would be applied, if needed, he added.
“We think markets are simply resting. We’ve had a good year-to-date progression in most capital markets, and markets look a little tired,” Russell said.
The Dow Jones industrial average fell 27.02 points, or 0.2 percent, to 12,938.67, its first down day in four. It’s still up nearly 6 percent for the year.
Dow decliners were led by Wal-Mart Stores Inc., which fell 2.4 percent. Investors hammered shares of the discount retailer for a second day after it delivered quarterly profit and sales that came in short of expectations.
The S&P 500 index fell 4.55 points, or 0.3 percent, to 1,357.66. Dell Inc. shares shed 5.8 percent a day after the personal-computer maker reported quarterly earnings short of expectations.
The Nasdaq composite index declined 15.40 points, or 0.5 percent, to 2,933.17, extending losses to a third day. It’s up nearly 13 percent this year, gains that have brought it to late 2000 levels.
Treasury prices gained, with the benchmark 10-year note yield falling to 2 percent.
Europe stocks ended lower after a survey of business activity for the eurozone showed a surprise contraction in February. Most Asian stock markets gained, with Japanese shares helped by a weaker yen.
The price of crude remained at a nine-month high, with the crude contract for April delivery rising 3 cents to close at $106.28 a barrel on the New York Mercantile Exchange.
“The Iran military situation and that influence on the price of energy is worrisome. The last thing the consumer needs is a $4 or $5 a gallon price of gasoline,” according to strategist Russell.
The U.S. data calendar was thin. The National Association of Realtors reported existing-home sales rose 4.3 percent in January to a seasonally adjusted annual rate of 4.57 million, below the 4.7 million projected by analysts polled by MarketWatch.
“It’s another data point consistent with a possible stabilization in the housing markets going forward. We don’t think we’re there yet, but a bottom could be called in the next few quarters,” said Russell.
The Obama administration on Wednesday proposed cutting the U.S. corporate rate to 28 percent from 35 percent while eliminating dozens of tax breaks.
“I think that trade-off is fair,” said Russell. But he said the White House’s tax plan, particularly a possible increase to dividend tax rates, “would be a negative to most investors.”
Also, the newly formed Consumer Financial Protection Bureau on Wednesday began an inquiry into overdraft fees, a multibillion-dollar business for U.S. financial institutions. “Overdraft practices have the capacity to inflict serious economic harm on the people who can least afford it,” Richard Cordray, director of the agency, said in a statement.
On Tuesday, stocks gained after European leaders agreed on another round of financial aid for Greece, with the Dow industrials surpassing 13,000 for the first time since mid-2008 during the session.
“We expect to see further near-term attempts to move above 13,000, although given rapidly rising energy prices, growing Middle East tensions surrounding Iran, analysts trimming first-quarter 2012 earnings estimates and ongoing European concerns, we have our doubts,” wrote Fred Dickson, chief investment strategist at Davidson Cos., in emailed commentary.
